End of entitlement as we know it

Sunday

May 5, 2013 at 6:00 AMMay 5, 2013 at 7:37 AM

Robert Samuelson ECONOMIC COMMENTARY

We are passing through something more than a period of disappointing economic growth and increasing political polarization. What's happening is more powerful: the collapse of “entitlement.” By this, I do not mean primarily cuts in specific government benefits, most prominently Social Security, but the demise of a broader mindset — attitudes and beliefs — that, in one form or another, has gripped Americans since the 1960s. The breakdown of these ideas has rattled us psychologically as well as politically and economically.

In my 1995 book, “The Good Life and Its Discontents,” I defined entitlement as our expectations “about the kind of nation we were creating and what that meant for all of us individually”:

We had a grand vision. We didn't merely expect things to get better. We expected all social problems to be solved. We expected business cycles, economic insecurity, poverty, and racism to end. We expected almost limitless personal freedom and self-fulfillment. For those who couldn't live life to its fullest (as a result of old age, disability, or bad luck), we expected a generous social safety net to guarantee decent lives. We blurred the distinction between progress and perfection.

Bill Clinton has a pithier formulation: “If you work hard and play by the rules, you'll have the freedom and opportunity to pursue your own dreams.” That's entitlement. “Responsible” Americans should be able to attain realistic ambitions.

No more. Millions of Americans who have “played by the rules” are in distress or fear that they might be. In a new Allstate/National Journal survey, 65 percent of respondents said today's middle class has less “job and financial security” than their parents' generation; 52 percent asserted there is less “opportunity to get ahead.” The middle class is “more anxious than aspirational,” concluded the poll's sponsors. Similarly, the Employee Benefit Research Institute found that only 51 percent of workers are confident they'll have enough money to retire comfortably, down from 70 percent in 2007.

First, that economists knew enough to moderate the business cycle, guaranteeing jobs for most people who wanted them. This seemed true for many years; from 1980 to 2007, the economy created 47 million non-farm jobs. The Great Recession revealed the limits of economic management. The faith in a crude stability vanished.

Second, that large corporations (think: General Motors, AT&T) were so dominant that they could provide secure jobs and generous benefits — health insurance, pensions — for much of the labor force. Deregulation, foreign competition and new technologies changed all this. Companies became more cost-conscious, cutting jobs and squeezing fringe benefits. The private “safety net” has shrunk.

Third, that improvements in economic efficiency (aka, “productivity”) would lift living standards and finance bigger government without steeper taxes. Government could pay for new programs by taking a fixed share of rising incomes. In reality, greater income inequality has dampened middle-class living standards, while existing programs, soaring health costs and the effects of an aging population have claimed an ever-larger share of taxes.

Fourth, that lifestyle choices — to marry or not, have children, or divorce — would expand individual freedom without inflicting adverse social consequences. Wrong. Family breakdown has deepened poverty and worsened children's prospects. About 30 percent of children live with either one parent or no parent; on average, their life chances are poorer than those in two-parent households.

Weighed down by these contradictions, entitlement has been slowly crumbling for decades. The Great Recession merely applied the decisive blow.

Entitlement implied an almost-limitless future. Facing limits is a contentious exercise in making choices.

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